European Business Association of Armenia organized discussion related to implementation of new Tax Code

ArmInfo. European Business Association of Armenia has organized a discussion on the issues of implementation of the new Tax Code, certain components of which will come into force already from 2017, while in January 2018 it will fully come into effect.

Head of Economic Programs of the OSCE Office in Yerevan Matthias Lichtenberger told the meeting participants that discussions around the implementation of the Tax Code should be activated in the society and Armenia's business community should be provided with qualitative information about the amendments. He noted that the OSCE Office supports the reforms being held in the country in various sectors of economy such as energy, transport and other infrastructures and is ready to work on the problem of facilitating tax administration.

Head of Tax Policy and Disciplinary Programs Department of Armenia's State Revenue Committee Arman Poghosyan noted that the new tax legislation incorporated in one Tax Code significantly reduces uncertainty in business activities, as excludes any mismatches and confusion, which existed before when the tax legislation was based on numerous legal documents and acts that often contradicted to each other.  According to him the Code covers all the steps on VAT return during the implementation of long-term investment programs, which in fact unfreeze the investors' funds. Besides, advance payment on income tax is canceled and the tax from now on will be calculated not from the amount of income of the whole previous year but will total 2% from the income of the previous quarter. Restrictions on expenses, if those are necessary for making business, are also cancelled.

However, the members of the EBA, the most of which are foreign organizations and companies have expressed dissatisfaction with introduction of differentiated tax on dividends: it totals 10% for foreigners while for local businessmen the tax is 5%. They consider that this is a discriminative measure and it does not lead to attraction of foreign investors to the country. The representative of the State Revenue Committee tried to reassure the attendees stating that Armenia has separate interstate agreements with the main investor countries, which have priority force, and in accordance with which from the investors of those countries the tax on dividends will be collected according to standard procedure.

However, during the discussions an opinion was voiced about low level of the Tax Code elaboration, which in fact is aimed not at supporting economy development, but at replenishing state budget, in other words the document has exclusively fiscal purpose. This is also proved by the fact that the authors of the document refused to solve the issue of developing leasing services, the relevance of which has been voiced by the business community of the country for many years. It is noteworthy that none of Armenia's NGOs representing interests of small or large business did not gave positive assessment of the Tax Code developed by the previous government. Urgent adoption of the Code was caused by the IMF demand, which put it as a condition for providing new budget loan amounted to $180 mln. The new government considers that the Tax Code should be improved with time.